ACIT-13(1)(2), MUMBAI, MUMBAI vs. PERLIN COSMECEUTICALS PRIVATE LIMITED, MUMBAI

ITA 7781/MUM/2026Status: DisposedITAT Mumbai08 October 2026AY 2014-1513 pages
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What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were not sustainable in law. The Tribunal noted that the AO issued a notice under Section 143(2) on October 17, 2019, while the assessee's objections to the reopening under Section 148 were pending and were only disposed of on February 16, 2021. This action was contrary to the procedure mandated by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO and the jurisdictional High Court in HP Diamonds India Pvt. Ltd. v. DCIT, which require the AO to adjudicate objections to the assumption of jurisdiction by passing a speaking order before proceeding with the assessment. The Tribunal found this defect to be a jurisdictional one, rendering the reassessment proceedings and the consequent assessment order liable to be quashed. As the reassessment proceedings were quashed on this jurisdictional ground, the other grounds raised by the assessee and the Revenue became academic, and the Tribunal did not consider it necessary to adjudicate upon them. The cross-objection filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2014-15, and the assessee filed a cross-objection. The Revenue's appeal challenged the deletion of an adjustment of Rs. 70,98,36,611/- to the book profit under Section 115JB, alleging the use of sham projections for the L'Oreal brand transfer. The assessee's cross-objection challenged the validity of the reassessment proceedings initiated under Section 147/148, arguing the notice was issued to a non-existent entity due to amalgamation and that the Assessing Officer (AO) failed to dispose of objections before issuing a notice under Section 143(2). The assessment year in question is 2014-15.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147/148 of the Income Tax Act, 1961, are valid, considering the assessee was amalgamated prior to the notice and the AO failed to dispose of objections before issuing a notice under Section 143(2)? (Question of law and fact, turning on Section 147, 148, 143(2)). - Assessee's contention: The notice under Section 148 and the subsequent assessment order are null and void as they were issued to a non-existent entity (Perlin Cosmeceuticals Pvt. Ltd. amalgamated with Fairmount Healthcare Pvt. Ltd. w.e.f. 01.04.2016). Furthermore, the AO proceeded with issuing a notice under Section 143(2) without disposing of the assessee's objections to the reopening, violating the principles laid down in GKN Driveshafts (India) Ltd. v. ITO and HP Diamonds India Pvt. Ltd. v. DCIT. The reopening was also challenged on the ground of change of opinion without failure to disclose material facts. - Revenue's contention: Not recorded in the judgment. 2. Whether the CIT(A) erred in deleting the adjustment of Rs. 70,98,36,611/- to the book profit under Section 115JB, by appreciating that the assessee utilized sham, unverified, and highly inflated internal asset projections to artificially lower its book profit, constituting a colorable tax avoidance device designed to circumvent the actual profits realized from the L'Oreal brand transfer? (Question of law and fact, turning on Section 115JB). - Assessee's contention: Not recorded in the judgment. - Revenue's contention: The CIT(A) erred in deleting the adjustment to book profit, as the assessee used sham projections to artificially lower its book profit from the L'Oreal brand transfer.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 143(2),Section 143(3),Section 147,Section 148,Section 271(1)(c),Section 234B

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Heard together (2 matters)

ITA 7781/MUM/2026
CO289/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: C BEFORE OM PRAKASH KANT, ACCOUNTANT MEMBERAND MS. DEBJANI MITRA NEOGY, JUDICIAL MEMBER (िनधा"रणवष"/AssessmentYear:2014-15) ACIT-13(1)(2), MUMBAI PERLIN COSMECEUTICALS R.NO. 261A, 2ND FLOOR, PRIVATE LIMITED AAYAKAR BHAVAN, MAHARSHI KARVE MARG, A/G-1, DHEERAJ MUMBAI-400020, MUMBAI- SANTACRUZ, MUMBAI- 400054 MUMBAI-400054, MAHARASHTRA अपीलाथ"Appellant ""थ" Respondent CO289/MUM/2026 (िनधा"रणवष"/Assessment Year: 2014-15) PERLIN ACIT-13(1)(2), MUMBAI COSMECEUTICALS R.NO. 261A, 2ND PRIVATE LIMITED FLOOR, AAYAKAR A/G-1, DHEERAJ MUMBAI-400020, SANTACRUZ, MUMBAI- MUMBAI-400020, 400054 MAHARASHTRA MUMBAI-400054, MAHARASHTRA अपीलाथ" Appellant ""थ" Respondent Permanent Account Number of Assessee: AAACC2664B

अपीलाथ""ारा/Appellant represented by: Shri V.S. Mahajan SR-DR CO 289/MUM/2026 PERLIN COSMECEUTICALS PRIVATE LIMITED

Shri Devendra Jain, ""थ""ारा/Respondentrepresented by: Adv & Mr. Mahesh O. Rajora, CA

सुनवाईकीतारीख/Date of conclusion of hearing: 06-Oct-2026 घोषणाकीतार

The order continues below.

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